Bankrate study reveals the “hidden homeownership tax” — an annual drag of over $3,300 annually on household wealth that penalizes borrowers across every income level, age group, and credit tier

New Bankrate research finds 87% of American mortgage borrowers are likely overpaying for their home loans as of 2025. It's not because better rates were unavailable — it's because most borrowers never found them. The $65 billion Americans who bought mortgages since 2022 overpay each year could have been saved had borrowers used Bankrate's mortgage auction, where lenders compete in real time on price alone. That's not a market problem. It's an access problem — and it's a solvable one.

Borrowers paid an estimated $65 billion in excess interest each year across mortgages originated since 2022, which comes out to about $3,343 per household annually. For the typical borrower, that adds up to $78,186 over the life of a 30-year loan, more than the median American household’s total retirement savings.

“The dream of homeownership feels increasingly out of reach for millions of Americans, so it’s worth asking whether the problem is the market or the process,” said Bankrate CEO Matt Fellowes, the primary author of the study. “Our research suggests that for most borrowers, competitive rates exist; borrowers just never see them. When lenders compete for a borrower’s business, the savings are meaningful and immediate: $279 a month on average, an amount that puts homeownership out of reach for many borrowers.”

A mortgage is the single largest financial contract most people will ever sign. While homeownership has long been considered the engine of middle class wealth creation in America, Bankrate’s research confirms the debt that wealth is built on materially weighs down Americans’ financial outcomes.

The study calls for two market-based policy responses:

1) A requirement that lenders disclose a benchmark rate for similarly qualified borrowers alongside any mortgage offer, and

2) A voluntary certification framework for lenders that compete in transparent multi-lender marketplaces.

Neither requires new government programs, and both are designed to make the competition that already exists in the mortgage market visible to the borrowers who need it most.

Bankrate was built on a simple premise: People deserve to know what the market actually offers them. They get better outcomes when banks compete for their business, and they pay a steep price when the leverage they can apply goes unused. People deserve access to the information lenders would prefer to keep to themselves, and the ability to act on that information when making big financial decisions like applying for a mortgage.

Key Findings

• The scale of the problem. 87% of borrowers likely overpay for their mortgages, costing roughly $11 billion in excess payments annually on loans taken out in 2025 and approximately $247 billion over the life of those loans. More than 90% of purchasing borrowers likely overpay, losing an estimated $3,656 per year. Refinance borrowers, despite having more time to shop, still likely overpay 79% of the time, losing $2,462 annually.
• The wealth paradox. 82% of low-income borrowers (under $49,000) likely overpay by an estimated $1,472 annually compared to 90% of higher-middle-income households ($100,000–$200,000) as of 2025. Higher-middle-income borrowers have the highest overpayment share of any income group, surrendering an estimated 23% of their total loan balance to avoidable mortgage costs over 30 years.
• The seniority tax. In the purchase market, every age group overpays at roughly the same rate. But in the refinance market, borrowers under 35 carry a lifetime tax equal to 14% of the refinanced loan balance. The refinance lifetime tax grows steadily with age, reaching 20% for pre-retirement borrowers (aged 55–64).
• The creditworthiness paradox. The most creditworthy borrowers are most likely to overpay. Of American mortgage holders in the lowest debt-to-income (DTI) quartile (below 33%), 91% overpay as of 2025. Borrowers in the second-lowest quartile (33% to 38%) post the highest segment rate in the entire dataset at 92% overall.
• The conventional premium. Conventional borrowers, the most creditworthy in the study, overpay 89% of the time as of 2025, carrying lifetime excess costs equal to 23% of their loan balance. This is a higher rate than Federal Housing Administration (FHA) borrowers (83% overpayment rate and 17% lifetime tax) and Veterans Administration (VA) borrowers (81% overpayment rate and 18% lifetime tax). Both FHA and VA programs impose standardized consumer protections that limit lender pricing discretion, while the conventional market does not.
• The geographic divide. Borrowers are most likely to overpay in Pennsylvania (90.2%), Oregon (90.1%), and New Hampshire (89.8%) as of 2025. However, the highest lifetime tax percentages — overpayment amounts relative to the loan balances — fall on states like New Hampshire (23.0%), Illinois (23.0%), New Jersey (22.9%), and Florida (22.6%), where the same spread bites harder on smaller principals.

Methodology

To measure mortgage overpayments in the U.S., Bankrate compared mortgage originations between 2022 and 2025 against offers lenders were making on Bankrate’s mortgage marketplace. Offers submitted through the Bankrate platform are binding — conditional only on the accuracy and completeness of the borrower's inputs — and are honored by the winning lender at origination. As a result, these bids are directly comparable to the terms at which loans are actually originated in the market, data made publicly available by the Home Mortgage Disclosure Act (HMDA).

Our model accounted for risk by factoring in 17 different criteria that affect a mortgage rate, including a borrower's down payment, loan size, debt levels, loan type, and more. Because FICO scores are not reported in the federal HMDA database, we used public housing data from Freddie Mac and Ginnie Mae to safely and accurately estimate them based on typical borrower profiles.

The study defines "overpayment" as how much a borrower’s actual interest rate exceeded the competitive market offers available for their exact borrower profile each month, weighted by monthly origination volume across a specific year’s rate environment. This provides an accurate measurement of the likelihood that a borrower paid more than competitive market rates, given their specific financial situation and the market conditions at the time they signed their loan.

About Bankrate

Bankrate is where Americans go to get the best price on life's most important financial decisions. By combining proprietary data, advanced technology, and deep market coverage, Bankrate helps consumers compare options and make confident financial choices across mortgages, credit cards, savings, and more. As a rate provider to the Federal Reserve and the benchmark relied upon by major publishers and policymakers nationwide, Bankrate's rate data is the national standard. This commitment to precision is reflected across all its products. In mortgages, proprietary auction technology puts lenders in real-time competition on price alone, consistently delivering rates in the lowest 10% in the country. For deposits, the platform features exclusively top-tier rates in the top 10% nationally, while its credit card coverage encompasses more than 90% of the market by volume. Founded by a journalist, Bankrate remains dedicated to its founding mission of transparency, honest information, and real competition — helping to make the American dream more affordable for everyone.

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87% of American Borrowers are Overpaying for Their Mortgages, Costing Households $65B Annually